REGULATORY MATTERS (Tables)

12 Months Ended

Dec. 31, 2020

We show the details of regulatory assets and liabilities in the following table and discuss them below.


REGULATORY ASSETS (LIABILITIES)
(Dollars in millions)
	December 31,
	2020		2019
SDG&E:
Fixed-price contracts and other derivatives	$	(53)	$	8
Deferred income taxes recoverable (refundable) in rates	22		(108)
Pension and other postretirement benefit plan obligations	50		103
Removal obligations	(2,121)		(2,056)
Environmental costs	56		45
Sunrise Powerlink fire mitigation	121		121
Regulatory balancing accounts(1)(2)
Commodity – electric	72		102
Gas transportation	35		22
Safety and reliability	67		77
Public purpose programs	(158)		(124)
2019 GRC retroactive impacts	56		111
Other balancing accounts	233		106
Other regulatory assets (liabilities), net(2)	72		(153)
Total SDG&E	(1,548)		(1,746)
SoCalGas:
Deferred income taxes refundable in rates	(82)		(203)
Pension and other postretirement benefit plan obligations	417		400
Employee benefit costs	37		44
Removal obligations	(685)		(728)
Environmental costs	36		40
Regulatory balancing accounts(1)(2)
Commodity – gas, including transportation	(56)		(118)
Safety and reliability	335		295
Public purpose programs	(253)		(273)
2019 GRC retroactive impacts	202		400
Other balancing accounts	(58)		(7)
Other regulatory assets (liabilities), net(2)	75		(101)
Total SoCalGas	(32)		(251)
Sempra Mexico:
Deferred income taxes recoverable in rates	80		83
Other regulatory assets	—		6
Total Sempra Energy Consolidated	$	(1,500)	$	(1,908)

(1) At December 31, 2020 and 2019, the noncurrent portion of regulatory balancing accounts – net undercollected for SDG&E was $139 million and $108 million, respectively, and for SoCalGas was $218 million and $500 million, respectively.

(2) Includes regulatory assets earning a return.

Schedule of Regulatory Liabilities

We show the details of regulatory assets and liabilities in the following table and discuss them below.


REGULATORY ASSETS (LIABILITIES)
(Dollars in millions)
	December 31,
	2020		2019
SDG&E:
Fixed-price contracts and other derivatives	$	(53)	$	8
Deferred income taxes recoverable (refundable) in rates	22		(108)
Pension and other postretirement benefit plan obligations	50		103
Removal obligations	(2,121)		(2,056)
Environmental costs	56		45
Sunrise Powerlink fire mitigation	121		121
Regulatory balancing accounts(1)(2)
Commodity – electric	72		102
Gas transportation	35		22
Safety and reliability	67		77
Public purpose programs	(158)		(124)
2019 GRC retroactive impacts	56		111
Other balancing accounts	233		106
Other regulatory assets (liabilities), net(2)	72		(153)
Total SDG&E	(1,548)		(1,746)
SoCalGas:
Deferred income taxes refundable in rates	(82)		(203)
Pension and other postretirement benefit plan obligations	417		400
Employee benefit costs	37		44
Removal obligations	(685)		(728)
Environmental costs	36		40
Regulatory balancing accounts(1)(2)
Commodity – gas, including transportation	(56)		(118)
Safety and reliability	335		295
Public purpose programs	(253)		(273)
2019 GRC retroactive impacts	202		400
Other balancing accounts	(58)		(7)
Other regulatory assets (liabilities), net(2)	75		(101)
Total SoCalGas	(32)		(251)
Sempra Mexico:
Deferred income taxes recoverable in rates	80		83
Other regulatory assets	—		6
Total Sempra Energy Consolidated	$	(1,500)	$	(1,908)

(2) Includes regulatory assets earning a return.

Proposed Revenue Requirement

The following table summarizes the location of balances related to the Wildfire Fund on Sempra Energy’s and SDG&E’s Consolidated Balance Sheets and Consolidated Statements of Operations.


WILDFIRE FUND
(Dollars in millions)
		December 31,
	Location	2020		2019
Wildfire Fund asset:
Current	Other Current Assets(1)	$	29	$	29
Noncurrent	Wildfire Fund	363		392
Wildfire Fund obligation:
Current	Other Current Liabilities	$	13	$	13
Noncurrent	Deferred Credits and Other	75		86
		Years ended December 31,
		2020		2019
Amortization of Wildfire Fund asset	Operation and Maintenance	$	29	$	12
Accretion of Wildfire Fund obligation	Operation and Maintenance	2		1

(1) Included in Prepaid Expenses for SDG&E.

The increases include separately authorized components for O&M and capital-related costs, as follows:


AUTHORIZED REVENUE REQUIREMENT INCREASES FOR 2020 AND 2021
(Dollars in millions)
	2020 increase from 2019				2021 increase from 2020
	Revenue increase		Percent increase		Revenue increase		Percent increase
SDG&E:
O&M	$	20	2.64	%	$	19	2.47	%
Capital-related costs	114		9.74		83		6.47
Total increase	$	134	6.74		$	102	4.83
SoCalGas:
O&M	$	36	2.64	%	$	34	2.40	%
Capital-related costs	184		14.36		116		7.93
Total increase	$	220	7.92		$	150	5.00

In December 2019, the CPUC approved the cost of capital and rate structures (shown in the table below) for SDG&E and SoCalGas that became effective on January 1, 2020 and will remain in effect through December 31, 2022. SDG&E did not propose a 2020 cost of preferred equity in this proceeding. In January 2020, SDG&E filed an advice letter to continue the cost of preferred equity for test year 2020 at 6.22%, which the CPUC approved in March 2020.


CPUC AUTHORIZED COST OF CAPITAL AND RATE STRUCTURE

SDG&E							SoCalGas
Authorized weighting		Return on rate base		Weighted return on rate base			Authorized weighting		Return on rate base		Weighted return on rate base
45.25	%	4.59	%	2.08	%	Long-Term Debt	45.60	%	4.23	%	1.93	%
2.75		6.22		0.17		Preferred Equity	2.40		6.00		0.14
52.00		10.20		5.30		Common Equity	52.00		10.05		5.23
100.00	%			7.55	%		100.00	%			7.30	%